Loan voices

The
Government is introducing a system of industry-based transferable loans as part
of its drive to overcome skills gaps. NTOs are responsible for developing the
scheme, which is being piloted by the gas industry. Alison Thomas canvasses
opinions on its value

Andy
PowellChief executive, NTO National Council

The
training loan scheme should not be seen in isolation and is one of a number of ideas
which NTOs are testing with employers in different industries.

The
aim is to overcome the two main hurdles which discourage employers from
investing in training – insufficient cashflow upfront and uncertainty over
return for investment.

Money
is loaned at an attractive rate and repaid in instalments after successful
completion of the training. If an employee moves to another company during
payback time, either the employee or their new employer takes over
responsibility for outstanding payments.

To
work effectively it must bring clear benefits both to the business and the
individual, who is rewarded by a salary increase. It also requires commitment
from everyone involved.

This
is not a scheme imposed from outside. It is a partnership between Government,
employers and individuals working together to address a shared problem and
develop practical solutions. No two schemes will be the same as each one will
be tailored to fulfil the needs of the industry concerned.

Frank
CorriganStrategic planning manager, Gas Industry NTO

When
it was a nationalised company, British Gas charged a premium price for a
premium product and invested some of the profits in training. With
privatisation, however, the industry has become fragmented and with the
pressures of competition, training has been neglected.

Only
128 new engineers joined the council for registered gas installers (CORGI) last
year. This compares with an annual intake of 2,500 apprentices under the
nationalised British Gas.

Employers
are concerned, but they cannot tackle the problem on an individual basis as
training is a drain on scarce financial resources and the poaching rate is
high. The training loan scheme is an attempt to address this. It is not a
panacea that will solve all the industry’s problems, but one small feature in a
collection of initiatives designed to reverse the negative training cycle.

Each
initiative in itself is modest, but we hope that cumulatively they will fire
people’s imagination as the pieces of the jigsaw come together.

Michael
KitsonEconomic adviser to the Institute of Manufacturing, University of
Cambridge

We
recently reported on work by the Economic and Social Research Council’s Centre
for Business Research of the University of Cambridge, which shows that labour
turnover is generally low, particularly in highly-skilled occupations. This
suggests that although in some areas poaching may be a problem, it is not a
universal one.

I
think this initiative may bring some benefit in certain occupations and sectors.
But to overcome the major training shortfall, the Government needs to look at
all the interrelationships between industrial policy, labour market policy and
macroeconomic policy; and the way these influence firms’ behaviour.

When
trading conditions are difficult – for example when sterling is over-valued –
training is often an early victim of the squeeze on profitability. Smaller
companies are especially vulnerable. The CBR’s research showed that many
companies with fewer than 500 employees are spending little or nothing on
training.

This
will remain a major concern as it is widely recognised that increased levels of
training are essential to improve industrial performance and build a strong
knowledge-based economy.

Felicity
BridgewaterHead of training & development, Granada Media

We
debated the proposal as an industry at Skillset’s – our NTO – board meetings
and decided to defer from the pilot, although we will be watching with interest
to see how it develops.

Our
circumstances are unusual in that over 60 per cent of people in the industry
are freelance and do not have a regular employer.

Nevertheless,
the industry is collaborating more and more on training, so in time it may be
appropriate. But it is not a priority at the moment.

The
Audia Visual Industries Training Group – comprising senior industry
representatives led by the Department of Culture, Media and Sport and Skillset
– is currently conducting a review into the needs of the broadcast/television
industry across the UK. When we have the outcomes we will be looking in more
detail at possible applications for the idea.

The
idea sounds attractive in theory and might be appropriate for those of our
staff whose jobs require vocational qualifications, such as healthcare
assistants and medical technical officers.

It
could prove complex, however. Unlike more homogeneous industries, we lose staff
to a whole raft of employers including the private health sector, social
services and the voluntary sector. Any reciprocal agreement would have to
involve all of these as well as small independent businesses like nursing
homes, which don’t operate as a single industry.

It
would be even more complicated in the case of trainees who move on to jobs
which only partially match the ones they have left. Would we be able to
establish an effective framework for negotiating how much of the cost should be
picked up by the new employer? Or would it become a bureaucratic nightmare?